A protection shield
The European Investment Bank is proposing to set up a protection shield for European companies. The economic and financial dynamics immediately ahead of us are approaching a tipping point: we have very little time left to put in place any measures to safeguard the European economy from this unprecedented shock.
The EIB Group recommends the creation of a pan-European guarantee fund of €25 billion. This guarantee fund would enable the EIB Group – in partnership with local lenders and national promotional institutions – to scale up its support to SMEs, mid-caps and corporates in the real economy by mobilising up to €200 billion, in addition to the €40 billion announced already.
How the guarantee fund would work
The €25 billion guarantee fund would be funded by EU Member States pro rata to their shareholding in the EIB and/or other institutions.
Thanks to the guarantee, the EIB Group would be able provide existing products to local banks and other financial intermediaries, who are in close contact with businesses in all member states and can unlock financing to the real economy, without risking financial instability.
The guarantee would support different types of operations of the European Investment Bank, and its subsidiary, the European Investment Fund:
- Guarantee instruments to commercial banks and national promotional institutions
- Guarantees to national guarantee schemes
- Counter-guarantees to national promotional institutions
- Support for SMEs and mid-caps funded by venture capital funds
- Purchases of asset-backed securities from banks, so they can provide more new loans to SMEs
- Venture debt to high-growth companies, including companies active in the pharmaceutical sector
By guaranteeing parts of portfolios, our operations under the guarantee fund would free up capital for the financial intermediaries involved to make more financing available for SMEs and mid-caps. Thus, we have calculated that up to €200 billion would become available.
The guarantee fund would provide guarantees to the EIB and EIF to reimburse any possible losses incurred for included operations. By pooling credit risk across all of the European Union, the overall average cost of the fund will be significantly reduced, compared to national schemes.
The use of the EIB also means that all Member States would benefit from the sharing of the bank’s top-level credit rating.
Who would benefit?
The guarantee fund is designed to primarily support private sector final beneficiaries in EU Member States that are high-risk but viable in the long-term and, in the absence of the COVID-19 pandemic, would meet a lender’s or other financial intermediaries’ requirements for commercial financing.
How, where and when can companies apply for these funds?
Most of the financing will be made available through financial intermediaries in all the EU countries; that means either through commercial banks or National Promotional Institutions. Once the funds are available, companies can file requests with the participating banks and intermediaries. This list will be available on eib.org.
A majority of the funding made available would likely be requested by companies in the hardest-hit member states and most heavily affected sectors. The EIB Group does not have country quotas, yet a balanced allocation across participating member states shall be the goal.
The EIB Group is working very hard for the funds to become available as soon as possible and is fast-tracking the decision-making process.
Additional to the emergency measures already announced on 16th March 2020
The European Investment Bank has previously announced a set of measures intended to mobilise €40 billion to the impacted SMEs. Some of this has been made possible with the help of guarantees by the European Commission. These measures are currently being deployed.
Additionally, the EIB Group has €5 billion available for investments in the healthcare sector. We have supported many companies in this sector in the past, including hospitals that are now in the front lines against the virus, and pharmaceutical companies that are working on cures, vaccines or rapid testing methods for COVID-19. Additional funding could go to healthcare infrastructure, further research or financing for vaccines and cures. We are also working on making another €5 billion available for coronavirus support to countries outside the EU - both to support healthcare infrastructure, as well as to maintain access to finance for impacted SMEs.
For SMEs and mid-caps looking for finance
- Intermediated lending: Find out how the EIB and its partners can help your business
- Direct lending for mid-caps: Discover what the EIB can offer
We will be publishing the list of EIF intermediaries for COVID-19 related financing support on EIF’s dedicated page as soon as the relevant financing agreements have been concluded.
Meanwhile you can check here the EIF’s current network of financial intermediaries in your country.
For financial institutions willing to partner with the EIB Group
Please visit our dedicated pages for the main product categories:
The EIF guarantees will be supported by the EU budget under the European Fund for Strategic Investments (EFSI).
We will support projects that work towards halting the spread of COVID-19, finding a cure and developing a vaccine against the disease. We will also finance urgent infrastructure improvements and equipment needs in the health sector using existing framework loans or undisbursed amounts from existing health projects.
Find more information
As the EU bank, we support healthcare projects that aim to ensure universal access to high-quality and affordable services. Discover the impact of some of our projects
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